PG&E’s $20 billion plan to repay fire victims falters at Capitol

A bill that would have allowed PG&E to issue bonds to pay wildfire victims will not pass this year, an investor group said Friday. The bill and other measures to bolster PG&E’s finances have been criticized as “bailouts” by opponents.

Photo: Lea Suzuki / The Chronicle

SACRAMENTO — PG&E’s plan to take on billions of dollars in tax-exempt debt to help pay victims of devastating wildfires has fizzled at the state Capitol, at least until next year.

After weeks of intense lobbying, the hedge funds who own much of the company announced Friday that they don’t expect to pass the legislation before lawmakers adjourn their session for the year on Sept. 13.

The utility had said the plan would help it raise enough money to pay claims from victims of wildfires started by its equipment, including last year’s historically deadly Camp Fire.

Steven Maviglio, a spokesman for the hedge funds, said the investors will keep working to pay fire victims and “will return in January with a renewed effort to getting this beneficial legislation the full and fair consideration it deserves.”

The proposal, AB235, would allow PG&E to use as much as $20 billion in tax-exempt bonds as part of the company’s plan to resolve its bankruptcy case.

Assemblyman Chad Mayes, R-Yucca Valley, said he proposed the legislation because it would allow victims to be repaid quickly without raising customers’ rates. He said the plan required PG&E to repay the debt with shareholder profits.

On Friday, Mayes said the bill won’t be debated this year because “there was no time to fully sort this thing out.”

“You couldn’t get proper vetting in the last week,” he told reporters, adding that rival investors had muddied facts around the proposal. “There’s a lot of misinformation that had been floating out there.”

The proposal faced heavy opposition from critics who labeled it a PG&E “bailout.” Bondholders, who are jostling for control of the company through its bankruptcy process, launched an opposing campaign with radio and internet ads.

Their opposition website, stopthepgebailout.com, labeled the company-backed plan “an effort in the California legislature to bail out PG&E on the backs of ratepayers and taxpayers.

The plan also faced opposition from several ratepayer advocacy groups, including the Agricultural Energy Consumers Association, which represents farming and food-processing utility customers in the state.

“The proposal, despite the rhetoric, was a highly flawed proposal that would have led to significant impacts for ratepayers in California,” said Michael Boccadoro, executive director of the energy consumer group.

He called PG&E’s suggestion that the plan wouldn’t impact rates “ridiculous” given the company is simultaneously seeking to increase shareholder profits. “Those profits come from us,” Boccadoro added.

PG&E CEO Bill Johnson has said the proposal doesn’t contain “a single iota of bailout.” Backers of the plan launched their own campaign in support, including the website wildfirerecoverynow.com.

The company says it wants to increase shareholder returns, which in turn would add more than $4 to the monthly bill of an average residential customer, to account for its worsening wildfire risks.The company is already asking regulators to let it raise shareholder profits — which, in turn, will raise rates.

Johnson has said that request to increase shareholder returns is not directly related to the new debt plan.

“We’re pleased to see policymakers acknowledge the merits of this proposal and look forward to lawmakers considering it in January as a balanced approach that prioritizes and protects both wildfire victims and customers,” a PG&E spokeswoman said in a statement.

PG&E shares fell 3.5 percent Friday to $10.19 and are down 44 percent from July.

The utility is under pressure to exit bankruptcy quickly. A state law passed in July requires PG&E to resolve its bankruptcy by June 30 in order to access a new fund created to protect power companies from future wildfire liability costs.

Dustin Gardiner is a state Capitol reporter for The San Francisco Chronicle. He joined The Chronicle in 2019, after nearly a decade with The Arizona Republic, where he covered state and city politics. Dustin won several awards for his reporting in Arizona, including the 2019 John Kolbe Politics Reporting award, and the 2017 Story of the Year award from the Arizona Newspapers Association. Outside of work, he enjoys hiking, camping, reading fiction and playing Settlers of Catan. He's a member of NLGJA, the association of LGBTQ journalists.